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February 13, 2009
How To Push Back Constructively
It has been a strange week for the business community on both sides of the Atlantic. Big bankers from the US and the UK were called before their legislators, who were venting public frustration over huge pay packages, constipated lending and opaque use of government bailout funds. It is important that companies learn how to play a new game, to dance the tango with a newly aggressive partner, namely government. Here are the four steps to a more equal relationship with the big-footed dancing companion:
- Explanation and Contrition—No forward movement is possible in this relationship without an examination of the past. Companies should be willing to acknowledge misjudgment, and yes, even error. There should be lessons learned, policies amended, personnel changed in the process. The more specific the information, the more likely it is to be credible. For example, “We anticipated that the maximum decline in housing price would be 20% but the decline has proven to be 35%.” There must also be a clear statement of contrition, not a fuzzy “once in a lifetime market circumstances”. Executives should acknowledge personal failure and apologize to shareholders and employees alike.
- Appreciation for Change from Shareholder to Stakeholder—CEOs must change from a uni-polar world of investors and analysts to a broader definition of audiences that puts employees first in line in the need to know. There should be a recognition of implication for society in any action, from reduction in force to decision to relocate production to another facility.
- Presentation of Long Term Vision—The company needs to solicit buy-in for its future direction. Rather than keeping strategy as a matter for the board of directors alone, the CEO should share the vision with its broader publics. This will enable its new investor (government) to have the public support for a long-term view instead of being forced into short-term measures. This test was failed by the auto companies when they went to Washington; the CEOs were there to answer questions and ask for money. The rationale must be more than “we need the money to survive.” It must be, “Here is our plan to invest the money in transforming this industry.”
- Accountability—Just as private investors would expect a regular reporting of results, the government investor will demand a new level of transparency on use of funds. This has been lacking in the present bank bailout, where there seems to be little progress in flow of loans to small and medium sized enterprises. There should be an ombudsman or external advisory board charged with the delivery of the accounts to the public. Business must also explain why it needs to conduct its affairs in a certain way, why independent sales agents need to be entertained by the company to generate sales, why incentive travel or bonus payments are important to optimal performance.
Posted by Edelman at February 13, 2009 6:13 PM |
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Comments
Richard - Your points are prescient, and to the matter of those receiving government funds, numbers one and two on your action plan are all too easy to achieve, even under "old school" rules of corporate conduct, yet I don't think we'll really see them, unfortunately. This to me, is proof positive of the traction that public relations counselors can truly gain and affect as the internet, society and business move forward. With today's and tomorrow's increasing transparency, and the 24/7 news cycle, all of these items will count for more, and it is the guidance of PR counsel that will lead them. Best Regards, Steve
Posted by: Steve Shannon at February 14, 2009 11:41 PM
Richard, a "Spring Training" visit back to the work of Peter Drucker would be well worth any organization's time and effort in these remarkable times. Your 4 points certainly are critical to restoring trust between all the stakeholders, including employees.
However, core processes also need to be re-instilled. Drucker's Management by Objectives (MBO) was a straight-forward, no nonsense metrics approach to business. Each manager's tasks must roll forward into corporate goals (imagine the government working in such a way!).
When we realize he formulated his tasks for the manager of the future over 40 years ago, their prescience is shocking. They include:
- take more risks for longer
- be able to build an integrated team, each member of which is capable of managing his or her own performance in relation to the common objectives
- be able to communicate information
- be able to see the business, and the industry as a whole and to integrate his or her function with it.
If management is about process, leadership is about dreaming. When our business leaders start to truly dream of what they might be capable, they begin the process of consistent visionary communication that is the emotional glue binding followers and leaders.
We need to revisit the institution of work as a place for dreams, self actualization and great group accomplishments.
Posted by: Barry Collodi at February 16, 2009 5:32 PM
I feel we are in unchartered territory in this financial decline. Only two years ago all the financial pundits were predicting more increases in asset prices and very few predicted the current decline, this makes me very skeptical of any current predictions on the size of the recession.
Posted by: Sam Tilston at February 17, 2009 6:29 AM
I seriously doubt that "business" has sufficient collective wisdom to do any kind of all-encompassing restoration of trust. While some will get it, most will continue to see things in short term, defensive, or in the narrowly commercial terms that tend to blot out the courage required to behave differently in this new environment.
The opportunity you describe is available to specific businesses, which build their brands on an understanding of trust and accountability. But they will be few and far between.
Posted by: Pattrick Smellie at February 17, 2009 9:58 PM
Attending the trust breakfast in Seattle this AM and hope you will address the role of the conventional "free" media in fostering or
fettering clean "explanations" of policy.
I'm the tall guy that played Harvard basketball but was recruited by the crew jocks every time he crossed the yard.
Enjoy the blog and appreciate you practicing what you preach.
Posted by: Hal Calbom at February 18, 2009 9:33 AM